Oxford: Tariff Refunds Provide a Floor, Lilly Pulitzer a Problem
The apparel maker beat Q1 expectations on margin and now has a $25M refund pipeline, but a Lilly Pulitzer assortment miss clouds the consumer story.
OXM · Earnings Call · 2026-06-10
Tariff Relief and a Margin Surprise
Q1 was a study in contradictions. Revenue of $391M was flat year-over-year and landed at the top end of guidance, but a 63.4% adjusted gross margin—down a modest 90 basis points—beat internal expectations. That margin resilience came despite absorbing $11M or $0.55 per share in incremental tariff costs. As Tom Chubb put it: “That gross margin performance reflects meaningful work done by our teams over the past year to respond to tariff pressure including updates to our sourcing strategies refinements to our pricing architecture, improve freight rates through vendor negotiations, and the benefit from a higher mix of direct to consumer sales.” — Thomas Caldecot Chubb, CEO · 2026-06-10 The margin story is tightly coupled to a new theme: tariff refunds. The Supreme Court's February ruling invalidated certain IEEPA tariffs, and Oxford has begun collecting. CFO Scott Grassmyer noted on the call: “Today, we have filed for approximately $25 million in phase 1 claims and have begun to receive refunds.” — K. Scott Grassmyer, CFO · 2026-06-10 Crucially, these refunds are not included in guidance—so any receipts are pure upside. The IEEPA refund is a top theme across the market this quarter (it ranks #3 globally in the latest period), and Oxford is squarely riding that wave. Gross margin has oscillated between 60% and 65% over the past decade; the Q1 adjusted number came in at the high end of that band, and with refunds accruing, there is room for further improvement.Lilly Pulitzer: From Weather Excuse to Merchandising Reality
The contrast between the company's explanation last quarter and today is stark. In March, Tom Chubb blamed Florida's cold February for Lilly's soft start: “when it's cold in February, comps are weak... and the whole East Coast... just so much snow up there.” — Thomas Chubb, Chief Financial Officer · 2026-03-26 Now, he admits the problem was more fundamental—an assortment that skewed too vintage-heavy, too novelty-focused, and under-inventoried at the opening price point. As he told Dana Telsey: “we were way under inventoried in our opening price point bucket... leaned heavily into the sort of vintage prints... we swung the pendulum a little bit too far on that novelty.” — Thomas Caldecot Chubb, CEO · 2026-06-10 The fix, he says, will take time on the product side but can be accelerated in messaging and promotions. This is a genuine company-specific stumble—the turnaround plan at Johnny Was is on track, but Lilly needs its own reset.Brand Divergence: Tommy's Momentum vs. Johnny's Turnaround
Not all is soft. Tommy Bahama posted mid-single-digit direct-to-consumer comps, with women's up 7.5% and 30% of e-commerce orders now including both men's and women's items. “We believe that benchmark really well in terms of our ability to sell both genders effectively.” — Thomas Caldecot Chubb, CEO · 2026-06-10 That momentum is expected to continue, though the company guides to slightly lower comps in Q2 due to Father's Day timing. Johnny Was, meanwhile, is executing a tighter inventory and promotional cadence. The brand still faces wholesale pressure—especially from the Saks Global bankruptcy process—but gross margins improved and management targets positive comps in the second half. The tariff refund tailwind is not the only one; emerging brands like Beaufort Bonnet and Duckhead are growing low-double-digits, adding to the mix.Consumer Softness and the Revised Outlook
Management struck a cautious tone, noting that sales softened through April into May and early June. Consequently, they lowered the top end of full-year revenue guidance to $1.505B and narrowed EPS to $2.30–$2.70.The company expects gross margin to improve 100–200 basis points in Q2–Q4, driven by lower tariff rates assumed at 10% and continued sourcing shifts. If refunds come through—and they are not in the numbers—EPS could beat. The stock has been in a drawdown (down 23.5% over the past 90 days), but the combination of a beat, a refund pipeline, and a clear read on Lilly's issues makes this a name to watch.Today, we have filed for approximately $25 million in phase 1 claims and have begun to receive refunds. A refund process for phase 2 and the remainder of our unfiled claims has not yet been established, but we are ready to file claims for refunds as soon as a process is established.